Smith, Inc., has the following stockholders equity accounts as of January 1, 2014:

Preferred stock$100 par, nonvoting and nonparticipating, 8 percent cumulative dividend	$	2,200,000
Common stock$20 par value		4,200,000
Retained earnings		10,200,000

Haried Company purchases all of Smiths common stock on January 1, 2014, for $14,430,000. The preferred stock remains in the hands of outside parties. Any excess acquisition-date fair value will be assigned to franchise contracts with a 30-year remaining life.

During 2014, Smith reports earning $650,000 in net income and declares $560,000 in cash dividends. Haried applies the equity method to this investment.

a.	What is the noncontrolling interests share of consolidated net income for this period?

Net income-noncontrolling interest's shares

176,000

b.

What is the balance in the Investment in Smith account as of December 31, 2014?

Investment in Smith account

14,519,000

c.

What consolidation entries are needed for 2014?

(1) Prepare entries S and A (combined)

Consolidating Entries	Debit	Credit
Common stock (Smith)	4,200,00
Franchises	30,000
Preferred stock (Smith)	2,200,000
Retained earnings (Smith)	10,200,000
Investment in Smith		14,430,000
Noncontrolling interest in Smith		2,200,000

(2) Prepare entry I

Consolidating Entries	Debit	Credit
Equity income of subsidiary	???
Investment in Smith		???

(3) Prepare entry D

Consolidating Entries	Debit	Credit
Investment in Smith	???
Dividends declared		???

(4) Prepare entry E

Consolidating Entries	Debit	Credit
Amortization expense	1,000
Franchises		1,000